Alabama Taxes 2025
Complete tax guide and OBBBA calculator for AL residents
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Alabama Tax Overview 2025
State Income Tax
2% - 5%
Graduated rate structure
Combined Sales Tax
9.24%
State 4.00% + Local 5.24%
Avg Property Tax
0.41%
One of the lowest property tax rates in the nation
💼 Alabama Income Tax 2025
Alabama has graduated income tax rates ranging from 2% to 5%.
When filing your Alabama state tax return, your income tax liability depends on your taxable income and filing status. Alabama uses a graduated income tax structure.
Alabama Income Tax Quick Facts
🛒 Alabama Sales Tax 2025
Alabama's combined average sales tax rate is 9.24%, which includes both state and local components. The state sales tax rate is 4.00%, while local jurisdictions add an average of 5.24%.
Sales Tax Breakdown
💡 Tip: Local sales tax rates vary by city and county. Your actual rate may be higher or lower depending on where you shop.
🏠 Alabama Property Tax 2025
Alabama's average effective property tax rate is 0.41%. One of the lowest property tax rates in the nation.
Property taxes in Alabama are assessed at the local level by counties and municipalities. Rates can vary significantly between jurisdictions.
Example Annual Property Tax
| Home Value | Est. Annual Tax | Monthly |
|---|---|---|
| $250,000 | $1,025 | $85 |
| $400,000 | $1,640 | $137 |
| $600,000 | $2,460 | $205 |
OBBBA Tax Benefits for Alabama Residents
Alabama residents can benefit from OBBBA deductions on federal returns while still paying state income tax on tips and overtime.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced several new federal tax deductions that Alabama residents can claim starting with their 2025 tax returns.
Available OBBBA Deductions for AL Residents:
Calculate Your Alabama Tax Savings
Use our free OBBBA calculator to see exactly how much you could save on your 2025 federal taxes as a Alabama resident.
Calculate My SavingsHow Alabama Compares
| Tax Type | AL Rate | US Average | Comparison |
|---|---|---|---|
| Income Tax (Top Rate) | 2% - 5% | 5.1% | Varies |
| Sales Tax | 9.24% | 7.12% | Above Avg |
| Property Tax | 0.41% | 1.10% | Below Avg |
Frequently Asked Questions
What is the income tax rate in Alabama?
Alabama has a graduated income tax with rates of 2% - 5%. Alabama has graduated income tax rates ranging from 2% to 5%.
What is the sales tax in Alabama?
The combined average sales tax rate in Alabama is 9.24%. This includes the state rate of 4.00% plus an average local rate of 5.24%.
How do OBBBA deductions benefit Alabama residents?
Alabama residents can benefit from OBBBA deductions on federal returns while still paying state income tax on tips and overtime. Alabama residents can claim tips, overtime, auto loan interest, SALT, and senior bonus deductions on their federal returns.
When are Alabama taxes due?
For tax year 2025, Alabama state taxes are due on April 15, 2026, the same date as federal taxes. Extensions may be available if you need more time to file.